The 10 most overbought and oversold ASX 200 stocks – Week 40
Seven Group is the most overbought stock on the ASX 200, with an RSI of 85.
Source: iStock
Mentioned
KEY POINTS
- Seven Group is the most overbought stock on the ASX 200, with an RSI of 85
- Seven Group has reported better-than-expected full-year results, with strong growth from segments such as WesTrac, Boral and Coates
- The oversold list continues to feature recurring names like Block, Qantas, Chalice Mining and REITs
The stars can sometimes align for a stock to go an absolute tear. And that's been the case for Seven Group (ASX: SVW) which marked its 12th straight week of gains, making it the most overbought stock on the ASX 200 (for a second week).
The 14-day Relative Strength Index is a momentum indicator that measures the magnitude and speed of recent price changes to assess whether or not a stock is overbought or oversold.
An RSI of 70 or above is considered to be overbought, which means the stock is rising too quickly and likely to experience a pullback. Meanwhile, an RSI of 30 or below is considered to be oversold, which means the stock is falling too quickly and is likely to experience a rebound.
Based on this indicator, Seven Group is the most overbought stock with an RSI of 85, up from 78 a week ago.
The Most Overbought Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Seven Group | 85 | 11.4% | $31.15 | $30.24 | -2.9% | |
Pro Medicus | 78 | 13.7% | $83.39 | $70.31 | -15.7% | |
Paladin Energy | 73 | 30.2% | $1.10 | $1.06 | -3.6% | |
Treasury Wine Estates | 69 | 5.7% | $12.33 | $13.07 | 6.0% | |
Coronado Global | 69 | 23.1% | $1.95 | $2.01 | 3.3% | |
Karoon Energy | 66 | 10.0% | $2.64 | $2.90 | 9.8% | |
New Hope Corp | 66 | 12.8% | $6.35 | $6.20 | -2.4% | |
Metcash | 62 | 1.3% | $3.78 | $4.03 | 6.6% | |
ANZ Group | 61 | 1.3% | $25.66 | $25.53 | -0.5% | |
Megaport | 61 | -2.2% | $11.77 | $13.23 | 12.4% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday, 29 September 2023 close. (Table: Market Index | Source: Refinitiv)
Seven Group has managed to sustain a tremendous 12 week winning streak. Here's the summary of its price action so far:
Rallied ~50% between late September 2022 and March 2023
Traded sideways for 21 weeks between March and early July 2023
Pushed out in mid July to all-time highs
Positive weekly finishes ever since
Seven Group weekly chart (Source: TradingView)
From a fundamental perspective, it reported better-than-expected full-year results back in August, fuelled by strong growth from segments such as WesTrac, Boral and Coates. Brokers had the following to say about its FY23 results:
Goldman Sachs: FY23 revenue was 6% ahead of Goldman expectations, FY24 guidance exceeded consensus estimates by 6% as well. Upgraded target price to $31.00 from $27.90 due to factors including faster-than-expected de-gearing, updated Boral valuation and valuation roll forward (as businesses like Coates were "running on all cylinders."
Macquarie: FY23 EBIT was 5% ahead of Macquarie expectations with all segments beating forecasts (except media). "Another strong result with all Industrial businesses firing. Cash generation driving leverage below 2.5x target a key highlight," the analysts said.
So there we have it: A defensive and low-volatility stock that's lined up a perfect combination of better-than-expected results with a robust outlook and strong technicals.
The question is, can Seven Group continue its streak into 13 weeks? Or will we finally see a pullback? And in the event of one, will it be shallow and well-supported?
The oversold stocks list continues to see some recurring names like Block, The Star, Cromwell Property Group, Qantas, Charter Hall Retail REIT, Chalice Mining and Waypoint REIT. What we've observed in the past couple of months is that once a stock winds up in oversold territory, it has a hard time getting out.
On a side note, Block purchased Afterpay for US$29 billion in 2021. The company's market cap today is about US$27 billion.
The Most Oversold Stocks
Ticker | Name | RSI | 1-Month % | Close Price | Target price | Upside |
|---|---|---|---|---|---|---|
Block Inc | 17 | -23.0% | $69.09 | na | na | |
The Star Entertainment | 17 | -34.0% | $0.61 | $1.22 | 100.0% | |
Cromwell Property Group | 17 | -23.7% | $0.37 | $0.74 | 100.0% | |
Qantas | 19 | -12.4% | $5.18 | $8.33 | 60.8% | |
Charter Hall Retail | 20 | -10.0% | $3.14 | $3.98 | 26.8% | |
Bega Cheese | 20 | -16.3% | $2.52 | $3.50 | 38.9% | |
Chalice Mining | 22 | -35.0% | $2.32 | $4.41 | 90.1% | |
BWP Trust | 24 | -9.5% | $3.35 | $3.48 | 3.9% | |
Waypoint Reit | 25 | -10.0% | $2.25 | $2.74 | 21.8% | |
De Grey Mining | 25 | -22.0% | $1.12 | $1.87 | 67.7% |
'Target price' is an aggregate of all broker target prices under Refinitiv's database. Data as at Friday, 29 September 2023 close. (Table: Market Index | Source: Refinitiv)
